Comments on changes in the balance sheet figures are again dif cult owing to the different rate of exchange compared to the previous year. The total figures are down some £12 million while the dollar equivalent is up some $100 million compared to 1034, Speaking roughly, we can say that there Is a reduellon in the amount of current accounts, fixed deposits and note issue on one side, which counterbalanced on the other side by a reduction in cash and bullion, the "eauise of which will be seen when T refer Jater on to Hongkong, exchange, You will notice little or no change. in the total of our Bank Premises Account though we credited the account last year with $1 million and charged it with about half the east of our new building, Towards the and of the year became apparent that provision we had made in past years for certain contingencies would not be required, 50 your directors decided that as the fund £0 accumulated was in no way} profit "earned during the year it should be used to write down the new building, which now stands in our books at a very reasonable figure, 'A. few weeks ago at the annual meeting of one of the big banks at home the remark was made. that In recent years there had been one Important change In the position of barking in that nowadays' considera-lon had to be taken of the many uncertain political factors which are the most incalculable of the risks banker has to estimate.
In our case the political factor iv no new thing, but itis true that year, after year it'seems to become more and more dominant in the Far East, The past year has been particularly under the influence of political changes and business in the fortheoming year looks just as likely fo be under the same influence, T do not propose to weary you with a long dissertation on world condi Mons. 1 will merely say that the, rise in commodity prices In 1935 was the most promising factor in the world economic situation, and. that while the improvement' continues!
We opened the year with exchange at 1/8Ma. which advanced steadily through the spring, the peak of 2/6% being reached towards' the end of April, Prom then onwards silver and exchange declined and there began 8 remittance of the large amount of funds which had accumulated here ver the past two or three years: these operations necessitated the sale of an enormous amount of silver: which had been held as cover. The movement gathered pace in the autumn with the result, as you alt know, that the Hongkong Government followed the example set by Chi andi an embargo was declared on the Curther export of silver after Novem: her 9 by which date exchange fo 1/4%d. From that date for three weeks followed a period mneertainty during which the Rose again to over Is/Gel, bit by the beginning of December meos urea were promulgated to. control exchange and since then we have had 2 period of comparative rest from extreme Muctuations. We trust that this will be for the good of the Colony in that one of the nightmares 6f, merchandising hax been removed, The sudden drop in the value of our Jocal dollar, I'am afraid, hit the Government rather badly, and it is fered that their budget estimates which were formed before the heavy decline set in will be considerably ut of gear so we may be grateful that they started the year in an extremely Sound position. "At the same time it is {0 be hoped they will remember hada pretty Jean time for a considerable period and are not ina position to bear additional taxation; to meet the situation the proper course" should undoubtedly be to curtail expenditure, Dimeutties In Shanghai In Shanghai, our mat Henchman, whom we are glad (0 have with us to-day, has been strug ling through very trying times. All through the year he kept in close touch with the Chinese financial thorities and, like the other leading foreign bunkers, ce-operated with them as and when possible, "But circumstances were too formidable to prevent what Onally occurred, iticht from the beginning of the year the exchange situation was critical, confidence in the currency was lacking, id_inlerest rates were therefore almost prohibitive. There was 3 continual danger of panic fights from the dollar. The steady rise in silver from 24%d. at the beginning of the ar to its peak of 36% in April.
the continued uncertainty 35 where the U.S. silver policy was going to lead were perhaps of stand: ing factors. But there was also the uncertain political situation in North China and the dimeulties into which number of Chinese banks got, as well unfortunately as the crush of the Raven group and corton realty companies in Shanghai,
Text read from the printed page and cleaned; old type leaves the occasional error.